NAVIGATION

HKICPA Audit Practice Manual (APM) (2024 edition)

The APM 2024 edition has been updated to align with the requirements of HKSA 600 (Revised), Special Considerations—Audits of Group Financial Statements (Including the Work of Component Auditors). Click here to explore the new features.

The Institute offers support for implementing HKSA 600 (Revised), including an e-learning programme and a dedicated resource centre. Members are encouraged to take advantage of these resources to enhance their understanding and application of the standard.

The Institute’s Financial Reporting Standards Committee meeting minutes

Minutes of the September 2024 meeting is now available.

Reminder: Institute virtual roundtable discussion on IASB Exposure Draft Equity Method of Accounting

Don’t miss the Institute’s virtual roundtable on 19 November, where you can explore the implications of the proposals in the International Accounting Standards Board (IASB) Exposure Draft (ED) Equity Method of Accounting ─ International Accounting Standard (IAS) 28 Investments in Associates and Joint Ventures (revised 202x) and share your views. Register by 14 November to reserve your place.

Reminder: Upcoming live webinars on financial reporting

Join the upcoming live webinars to stay updated on the latest developments in financial reporting standards and to help you prepare for the year-end closing of 2024.

30 November: Annual Accounting and Sustainability Update 2024 – Be Prepared for the Upcoming Game Changers
4 December: Year-end reminders for insurers – Preparing for the year after implementation of Hong Kong Financial Reporting Standard (HKFRS) 17 Insurance Contracts
9 December: Accounting updates on financial instruments
11 December: Common application issues of HKFRSs
16 December: Year-end financial reporting reminders for 2024
19 December: Unlocking HKFRS 18 – An overview of new presentation and disclosure requirements

A short survey on the IASB’s project on accounting requirements for intangibles

As part of its project to comprehensively review the accounting requirements in IAS 38 Intangible Assets, the IASB is asking investors, companies and other stakeholders to complete a 20-minute survey to help the IASB to determine:

- the problem that the IASB needs to address;

- the scope of the project; and

- how the IASB should best stage the work to deliver improvements in a timely manner.

The survey is open until 30 November.

IASB October 2024 podcast and update

The IASB podcast, highlighting preliminary decisions of the IASB at its October meeting, and a summary of the October meeting, are now available.

Invitation to comment

The Institute is seeking comments on Proposed Hong Kong Standard on Auditing for Audits of Financial Statements of Less Complex Entities (HKSA for LCE). The proposal is to modify Part A of the International Standard on Auditing for Audits of Financial Statements of Less Complex Entities (ISA for LCE) issued by the International Auditing and Assurance Standards Board’s (IAASB) regarding the authority of the standard concerning the scope of the proposed HKSA for LCE in a local context. Key aspects include:

Refining the classes of entities prohibited from using the proposed HKSA for LCE to entities having public interest characteristics within a Hong Kong context.
Establishing quantitative thresholds to determine the appropriate use of the proposed HKSA for LCE within a Hong Kong context.

Watch the video to learn more about the proposed standard. You may submit your views via email or participate in the survey by 17 November.

The IAASB has also issued the following resources:

ISA for LCE – Authority Supplemental Guidance: This resource helps users in determining the appropriate situations to use the ISA for LCE, which further explains relevant matters and circumstances in accordance with Part A of the standard.
ISA for LCE – Adoption Guide: This guide supports jurisdictions in adopting the ISA for LCE by providing valuable insights into the adoption process. It highlights common steps, successful approaches, and potential challenges.

The institute has issued the following exposure drafts and would like to seek your comments by the respective due dates:

Exposure Draft, PN 620.2 (Revised), Communication between the Auditor and the Insurance Authority by 30 November. Proposed revisions reflect conforming changes as a result of the Insurance (Amendment) Ordinance 2023 which provides the legal basis for the implementation of the risk-based capital regime.

Exposure Draft, PN 810.2 (Revised), The Duties of the Auditor of an Insurer authorized under the Insurance Ordinance by 30 November. It proposes revisions as a result of (a) the Insurance (Amendment) Ordinance 2023 which provides the legal basis for the implementation of the risk-based capital regime, and (b) the subsidiary legislation.

Exposure Draft, PN 820 (Revised), The Audit of Licensed Corporations and Associated Entities of Intermediaries by 28 November. It proposes to update for amendments to the Securities and Futures Ordinance and the subsidiary legislation as a result of the implementation of the new regulated activity, Type 13.

Circular on Reporting under Rule 4.2 and Rule 4.4 relating to net asset requirement and Rule 4.6 relating to investment requirements of the New Capital Investment Entrant Scheme (New CIES Rules)

The circular has been updated for the enhanced measures on the New CIES Rules as announced in the InvestHK’s press release.

AFRC publications

The Accounting and Financial Reporting Council (AFRC) has released the following publications:

Audit implications of current economic conditions for Hong Kong-listed companies
This report examines how current economic conditions are impacting financial reporting and audit practices for Hong Kong-listed companies. It also provides relevant insights for company management, audit committees, and auditors.

AFRC Reinforces Commitment to Financial Reporting Integrity in Hong Kong
In this press statement, the AFRC emphasizes that its commitment to enhancing the financial reporting credibility in Hong Kong and addressing the issue of “bogus accountants” which is one of the persistent concerns within the profession. The AFRC has launched a dedicated webpage to help the public understand the legal requirements in relation to the signing of audited accounts. The AFRC, in collaboration with Financial Services and Treasury Bureau, the Inland Revenue Department, and the HKICPA to implement the proposed measures – (a) all persons issuing audit reports will be required to display their practising certificate number on the reports; (b) companies established in Hong Kong will be mandated to include the practising certificate number of the auditor who issued their audit reports in their profits tax returns.

Overview of the non-public interest entity audit market
This overview provides information on the market share of the non-public interest entity (non-PIE) audit market, the workload of non-PIE auditors, and the AFRC’s expectations on the provision of high-quality audit services by practice units.

IAASB approves landmark ISSA 5000 standard: A new era for sustainability assurance

This article by the International Federation of Accountants (IFAC) highlights a significant achievement by the IAASB with the recent approval of its International Standard on Sustainability Assurance (ISSA) 5000, General Requirements for Sustainability Assurance Engagements. This marks a pivotal step in enhancing the credibility and trust in sustainability reporting on a global scale. The standard will enable assurance practitioners to offer consistent and comparable services across markets, boosting investor confidence and enhancing the credibility of sustainability reporting globally. Members can visit the IAASB website for more information on the approval of ISSA 5000 and its next steps.

IAASB’s new technology position: 8 actions to embrace technology and innovation

The IAASB reaffirmed in this news its commitment to staying at the forefront of rapid technological changes with the adoption of its comprehensive Technology Position Statement to integrate technological advancements into its standard-setting activities. This statement outlines actions to embrace innovation, remove barriers, and introduce new requirements and guidance, to ensure that the standards remain relevant, effective and aligned with the public interest. Members are encouraged to visit the IAASB’s technology focus area page, which offers related resources to support practitioners in conducting audit engagements.

IAASB eNews

The IAASB latest eNews is now available, highlighting various activities going on in and around the IAASB.

ICAEW publications

The Institute of Chartered Accountants in England and Wales (ICAEW) has released the following publications:

Is your sustainability assurance house in order?

The ICAEW remarks in this article that sustainability claims made by businesses are increasingly under the spotlight. It explores how internal audit should work with external providers of assurance to ensure material controls are fit for purpose.

Artificial intelligence (AI)

The ICAEW maintains a host of resources to support practitioners in navigating the challenges and opportunities offered by AI. Its short video series titled AI masterclasses offer practical insights in the real-world application of AI technologies. Topics covered include improving audit documentation, making audit sampling more efficient and effective, etc.

If you are interested in accessing the ICAEW’s online audit and assurance resources, please contact Member Engagement Department at me@hkicpa.org.hk for free enrolment on a first-come, first-served basis. Spots are limited. Please note that your name and email address will be shared with the ICAEW for communication purposes.

Institute webinar series towards an effective and efficient audit: Auditing opening balances and related parties

Join this webinar on 20 November to refresh your understanding and application of the requirements in HKSA 510, Initial Audit Engagements – Opening Balances and HKSA 550, Related Parties. The speaker will discuss the requirements and provide practical guidance on planning and executing audit procedures in these areas, as well as highlight common pitfalls to avoid.

Industry specific events in November

Workshop on Audit of Licensed Corporations and Associated Entities of Intermediaries on 14 November will cover:

Overview of the Securities and Futures Ordinance requirements
Highlights and reminders on PN 820 (Revised), The Audit of Licensed Corporations and Associated Entities of Intermediaries
Latest Securities and Futures (Financial Resources) Rules for the preparation of financial returns
Sharing of latest developments in rules and regulations relevant to audit

Revised definition of a PIE in the HKICPA Code of Ethics

This article outlines the key changes in the definition of a PIE following revisions to the Code of Ethics for Professional Accountants (HKICPA Code of Ethics). Members can also watch the video showcasing these changes. A set of Questions and Answers is also available to help members better understand the revised definitions of PIEs, supplementing the Basis for Conclusions for the Revisions to the Definitions of Listed Entity and Public Interest Entity in the Code.

AI adoption challenges: an ethical dilemma for auditors

This ICAEW article discusses the opportunities that artificial intelligence offers for audit firms and practitioners, and the complicated considerations involved in implementing AI solutions into audit functions.

If you are interested in accessing the ICAEW’s online ethics resources, please contact the Member Engagement Department at me@hkicpa.org.hk for free enrolment. Please note that your name and email address will be shared with the ICAEW for communication purposes.

Institute Ethics Webinar – Technology-related revisions to the Code

Join the webinar on 13 November to explore the revisions to the Code and how they strengthen its guidance for professional accountants in an era of rapidly evolving technology. The speaker will discuss how to effectively apply these revisions to navigate ethical challenges and manage risks in the digital age, with a focus on the fundamental principles of confidentiality, professional competence and due care, as well as handling complex situations.

HKICPA resource centre

Access resources and publications at the Institute’s Resource Centre to the Code which will keep you updated on the latest ethics pronouncements. Watch this video showcasing on how to easily access these valuable resources.

IFAC and global accountancy profession urge G20 to prioritize sustainability and governance

The IFAC’s new publication, G20 Call to Action 2024: Building a Just World & a Sustainable Planet, highlights the essential role of high-quality sustainability reporting and assurance in achieving global sustainability targets. IFAC calls for G20 leadership to foster a comprehensive ecosystem of sustainability reporting and assurance built upon the international standards and supported by strong corporate governance practices.

Last call: Institute workshop series (Part 1) - Identifying material information and determining the value chain

As part of the Institute’s capacity building program, a series of workshops are held to enrich the sustainability reporting knowledge of members and stakeholders in the local business community.

Don’t miss the workshop on 12 November, where speakers will discuss the concepts of materiality and proportionality mechanisms in the IFRS Sustainability Disclosure Standards. They will also share insights on practical applications through illustrative examples.

ESG webinar: Hong Kong Taxonomy for Sustainable Finance

Check out the upcoming live webinar on 20 November on the topic of Hong Kong Taxonomy for Sustainable Finance. Speaker from the Hong Kong Monetary Authority will introduce Asia's green transition and global trends in taxonomy development. They will also decode the taxonomies and delve into the Hong Kong Taxonomy for Sustainable Finance, published in May 2024.

ESG workshop on Decarbonization Strategy

Discover the workshop on 29 November to get an in-depth understanding of developing decarbonization strategies that can guide your company's journey toward net zero. Speakers from KPMG will introduce decarbonization and explore how to determine decarbonization ambition, including target setting and identifying decarbonization opportunities. They will also discuss monitoring and reporting decarbonization efforts.

This workshop is endorsed by the Hong Kong SAR Government's Pilot Green and Sustainable Finance Capacity Building Support Scheme. Eligible applicants may claim up to 80% of the reimbursable fees. Enrol now!

ISSB October 2024 podcast and update

In the podcast, the ISSB chair and vice-chair share insights into recent developments from the ISSB and an update from the ISSB’s October meeting. In addition, a summary of the October meeting is now available.

News from HKEX

In line with the development of the virtual asset ecosystem in Hong Kong, HKEX has announced the launch of the HKEX Virtual Asset Index Series on 15 November. The Series provides investors with real-time benchmarks for Bitcoin and Ether pricing in the Asian time zone. It will consist of the Reference Index (Index) and the Reference Rate (Rate). The Index is the first European Union Benchmarks Regulation (BMR)-compliant virtual asset index series developed in Hong Kong, and is a 24-hour volume weighted reference spot price of Bitcoin or Ether, using prices aggregated from top-rated virtual asset exchanges, calculated in real-time and denominated in US dollars. The Rate, calculated daily at 4:00 p.m. Hong Kong time, is designed for the settlement of financial products.

On 18 October, HKEX and the Securities and Futures Commission jointly announced an enhanced application timeframe for the New Listing application process. This aims to provide greater clarity and certainty regarding the timeline for reviewing new listing applications, particularly for those that fully meet requirements and for A-share companies that meet prescribed criteria.

Announcements by the Inland Revenue Department (IRD)

Members may wish to be aware of the following matters:

Announcements by the government

Members may wish to be aware of the following matters:

Anti-money laundering (AML) notices and news

AML notices:

The United Nations Sanctions (South Sudan) Regulation 2019 (Amendment) Regulation 2024 was gazetted on 22 October.
For the current lists of terrorists, terrorist associates and relevant persons/ entities under United Nations sanctions, members should refer regularly to the Institute's AML webpage. Other useful documents and guidance can also be found on the same page.

Publications from other organizations:

Navigating M&A in a complex landscape: What CFOs should know from CFO.com
Is your company putting AI first? The CEO of the second most valuable company in the world says it's a must from Entrepreneur.com
Common management reporting mistakes to avoid from Financial Management
How firms can score the right talent mix from Journal of Accountancy
What the real estate industry needs to know about data centers by McKinsey & Company

Disclaimer: Some sections contain external links and information from outside sources. We endeavour to link to reputable sources but the Institute is not responsible for the accuracy or content of the external site, and the content does not necessarily represent the views of the Institute. We recommend using your discretion when visiting these links.

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